-
Russian yuan reserves are nearing depletion as Chinese banks fear US sanctions.
-
Lenders have called on Russia's central bank to tackle the yuan shortage, sending the ruble tumbling.
-
China's hesitation stems from US threats of secondary sanctions over Russia's financing of the war in Ukraine.
Russian banks have almost completely used up their supply of yuan, largely because Chinese financial institutions are afraid to do business with the country.
Lenders have called on Russia's central bank to address the country's yuan liquidity shortage, as insiders say access to the Chinese currency has dried up, Reuters reported.
The Russian ruble fell nearly 5% against the yuan earlier this week, Reuters noted. The drop came shortly after Russia's Finance Ministry suggested the Central Bank of Russia would scale back its daily yuan sales, with central bankers selling just $200 million a day, down from the $7.3 billion sold daily over the past month.
Sberbank, a major state-owned bank in Russia, told Reuters it could no longer lend in yuan because it had “nothing to cover the trade”.
VTB, Russia's second-largest lender, said it was urging the central bank to address the yuan liquidity shortage by lowering the exchange rate and requiring exporters to the country to sell yuan to Russia.
Chinese banks have become more reluctant to trade money in Russia after the US threatened to impose secondary sanctions on countries doing business with Russia as it continues its war on Ukraine.
Payment disputes between Russian companies and Chinese banks have escalated in recent weeks, with nearly all Chinese banks halting transactions with Russia. Some banks have even bounced payments for goods that had already been shipped to Russia, fearing they would be targeted by sanctions, a Russian media outlet reported.
Russian companies have been denied access to billions in recent months, largely due to payment problems at foreign banks, data from the Russian central bank shows.
The payment problems pose a problem for the Russian economy, which has become increasingly isolated from global markets and more dependent on the Chinese yuan after the country was targeted by Western sanctions in 2022.
The Russian central bank said the yuan has become the top currency this year, accounting for more than half of all currency trading in the country.
Read the original article on Business Insider
